E-Invoicing Under GST: Part 11 - Myths around e-invoicing

Latest update: The government introduced a new GST e-invoice scheme under which businesses with turnover of Rs 500 crore and above will generate all invoices on a centralised government portal starting October 1, 2020. Earlier, the turnover threshold for businesses was set at Rs 100 crore.

E-invoicing under GST is finally here after much awaited anticipation. While the concept of e-invoicing is fairly straightforward, there are a large number of misconceptions around adapting to this new system. This article debunks myths around e-invoicing.

E-invoicing will force taxpayers to generate invoices from a common centralized portal.

Many people think that e-invoice will be generated from a centralized government tax portal. This is a myth. Taxpayers will be required to continue generating their own invoices using accounting or billing software, keeping in view the varied needs of the item master, buyer master, UQC etc. along with sub-second response from IR Portal (IRP). Thus, direct creation/generation of e-invoice from GST portal or any other government portal is not envisaged/planned.

E-invoice is required for all transactions

No. Currently, e-invoicing is mandatory only for business to business (B2B) and export transactions.

E-invoice cannot be generated without a billing software or ERP

The standard scheme issued by the Government of India needs to be incorporated by commonly available billing software. If you don't have access to that software, you need not worry. If you have a turnover below 1.5 crores, you can access the free billing software provided by the Goods and Services Tax Network to generate your e-invoice.

Separate invoice formats will be available for different businesses

A standard e-invoice schema has been issued by the Government of India. This schema is applicable to all kinds of businesses. While generating your invoice using this prescribed standard, all you have to do is fill in the optional fields that are relevant to your line of business.

Generation of Invoice Registration Number (IRN) will take time

On the contrary, an IRN is generated by the IRP in a matter of minutes. The IRP generates the invoice reference number, digitally signs the invoice and creates a QR code in Output JSON for the supplier. Meanwhile, the recipient of the supply will also be intimated of the e-invoice generation through email (if provided in the invoice).

E-invoicing is only meant for big companies

Technology and automation solutions ensure that e-invoicing is a cost effective solution, making it suitable for all kinds and sizes of business. It is not strictly meant for big companies.

Small taxpayers have to invest in a billing software post-implementation of e-invoicing

This is a myth. Small taxpayers can use one of the eight free accounting/billing software that have currently been enlisted by Goods and Services Tax Network.

Additionally, the GSTN will also provide an Offline Tool where data of an invoice, generated on paper can be entered into a system which in turn will create a JSON file for uploading to the IRP. Taxpayers can also use one of the commercially available accounting/billing software for this purpose. All accounting and billing software companies are being individually asked to adopt the e-invoice standard so that their users can generate the JSON from the software and upload the same to the IRP.

There is no real need for implementation of e-invoicing

E-invoicing will be a boon to companies filing their GST returns. Taxpayers don't have to deal with the cumbersome task of multiple entries - once an entry is made for an e-invoice, the same will be available under the e-way billing system post validation. This system will also help avoid duplication of invoices and will help companies adhere to the compliance process. Finally, e-invoicing will allow interoperability between various software - this means the invoice can be read by any accounting software which means faster processing and lesser chances of invoices falling under the web of tax reconciliation.

E-invoicing is expensive

Many people believe that e-invoicing is very expensive to implement. This is definitely not the case. In fact, e-invoicing can help reduce the cost of invoicing and it does away with costly overheads like storage, account reconciliation, invoice matching, multiple data entry and human errors.

To know more about our E-invoicing and GST compliance solutions, contact us here.

Follow our E-invoicing under GST Series on the links below:

1. E-Invoicing Under GST: Part 1 - What is an e-invoice?
2. E-Invoicing Under GST: Part 2 - E-invoicing and the Tax Department
3. E-Invoicing Under GST: Part 3 - Benefits of e-invoicing
4. E-Invoicing Under GST: Part 4 - Documents to be reported under e-invoicing
5. E-Invoicing Under GST: Part 5 - How does e-invoicing work?
6. E-Invoicing Under GST: Part 6 – E-Invoicing Workflow from Supplier to Invoice Registration Portal
7. E-Invoicing Under GST: Part 7 - Workflow from IRP to Buyer and GSTN or E-Way Bill System
8. E-Invoicing Under GST: Part 8 - Everything you need to know about Invoice Registration Portal
9. E-Invoicing Under GST: Part 9 – Features of e-invoice system you need to know
10. E-Invoicing Under GST: Part 10 – How to register your e-invoice
11. E-Invoicing Under GST: Part 11 - Myths around e-invoicing
12. E-Invoicing Under GST: Part 12 – Frequently asked questions on e-invoicing